Trades in dead man's account cost Prudential $250,000 fine

Reuters News Service

Published 5:30 am, Tuesday, July 31, 2001

BOSTON -- Prudential Securities has agreed to pay a $250,000 fine and tighten procedures at its Boston office after investigators alleged three brokers traded securities through a dead man's account and committed other crimes, Massachusetts officials said Monday.

Prudential Securities paid the fine for its lax supervision of the three brokers at the Boston office, Galvin said. The firm also agreed to increase supervision at the office in the wake of the abuses.

The settlement also covers allegations its brokers abused margin accounts, forged transfer forms and lied to complaining customers. Damages from the actions are estimated at more than $800,000, according to Galvin's office.

Prudential Securities agreed to give state securities officials a list of the customers with whom it has settled, and the amount of the settlements. None of the clients' names were released.

When Carnevale executed unauthorized trades that increased a client's margin account to almost $1 million despite an agreed-upon limit of $200,000, the broker reimbursed the client from his personal Prudential Securities account, Galvin said. The branch office management did not question these checks.

"When brokers systematically abuse margin accounts and make unauthorized trades or pretend to be supervisors when they are not, this office takes that very seriously," Galvin said in a statement.